Investment on the rise, says chief economic minister

Investment on the rise, says chief economic minister

Rendi A. Witular, The Jakarta Post, Jakarta

Coordinating Minister of the Economy Dorodjatun Kuntjoro-Jakti
insisted on Wednesday that foreign direct investment in Indonesia
was on the rise, saying that the gloomy reports from the
Investment Coordinating Board (BKPM) did not represent the real
situation.

"If we use the proper statistics, we can see the real growth
in investment," said Dorodjatun on the sidelines of the
International Conference on Population and Development on
Wednesday.

He explained that BKPM had failed to present a comprehensive
picture of the FDI situation, because it focused primarily on
licenses awarded to investors in select industries. It did not
cover investment in the oil, gas, mining and real estate sectors.

Furthermore, the agency ignored several other indicators
commonly used in other countries to measure foreign direct
investment growth. The indicators include the consumption of fuel
and electricity, the sales of commercial vehicles and
motorcycles.

The sales of these commodities have been on the rise over the
past several years.

Fuel consumption this year is expected to surge to 60.59
million kiloliters from 58.08 million in 2002 and 57.58 million
in 2001, while electricity consumption, according to a report
from Danareksa Research Institute, has been increasing by an
average of 9.2 percent over the last five years.

Industry data shows sales of commercial vehicles, such as
trucks and vans, increased by around 11 percent to 240,305 units
in the first nine months of the year compared to the same period
of last year. Motorcycle sales rose by 21 percent to 1.78 million
units from 1.47 units in the first eight months of the year
compared to the same period last year.

Dorodjatun said all these, which were ignored by the BKPM,
indicated bullish economic activity in the country.

"Many funding organizations said that investment growth in
Indonesia was higher than many had expected," said Dorodjatun.

BKPM's reports say that in 2002, FDI inflow into Indonesia
contracted by US$1.52 billion, meaning that the value of foreign-
owned businesses that relocated out of the country was $1.52
billion greater than the value of businesses entering the
country. In 2001, the FDI inflow had contracted by $3.28 billion.

Dorodjatun also criticized several economists who recently
painted a gloomy picture of the country's investment outlook,
saying funding organizations and stock market players have a
different perception.

"There are economists saying the country's economic prospects
are gloomy. Well, they can say that, but, as a matter of fact,
there are many players in the stock market who do not share their
opinion," he said.

Dorodjatun was apparently referring to the economists grouped
in the University of Indonesia's Research Institute for the
Economy and Society, who recently gathered and declared that the
country's economy would still be in great difficulty until 2008
with domestic consumption remaining the main driver of the
economy.

They said foreign investment, essential to revive the economy,
was still lacking due to various problems, including legal
uncertainty, labor unrest and corruption.

Dorodjatun said it was too early to predict the economic
conditions up until 2008.

"Frankly speaking, I am not bold enough to predict the state
of the country's economy until 2008 because the inflow of
investment is based on risk analysis which is hard to predict,"
he said.